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In Trevor Milton Trial Mark Russell Cites Black-Scholes On His Stock Citing Intervention

By Matthew Russell Lee, Patreon Maxwell book
BBC - Honduras - CIA Trial book - NY Mag

SDNY COURTHOUSE, Sept 20 – The trial of Nikola founder Trevor Milton for wire and securities fraud moved, on September 20, to the cross examination of Nikola's Mark Russell.  Inner City Press was there. Thread:

All rise!

AUSA Estes: Yesterday you were asked about the Badger... This email calls the Badger a distraction. What was your understanding of that?

Russell: It would be a dilution of our focus. AUSA: How so? Russell: A pick-up would require time and money.

AUSA Estes: Mr. Russell did you have a concern about all this? Milton's lawyer: Objection! Leading! Judge Ramos: Overruled. Russell: Yes, I was concerned.

AUSA: And did you vote for it? Russell: Yes, I saw that it would pass. And we try to keep our board votes unanimous because -- Milton's lawyer: Objection!

Judge Ramos: Overruled. Russell: The general rule is, you disagree behind closed doors.

Russell: The question was, why should be be in the pick-up truck space? AUSA: After Nikola moved to go public through the SPAC, did you discuss with Mr. Milton his role? Russell: Trevor said, I'm not sure the company if ready for me to step away

AUSA: How did you feel about that? Milton's lawyer: Objection! Judge Ramos: Overruled. Russell: It wasn't what we agreed.  AUSA: Did you try to change it? Russell: I did my best to persuade people. But he became executive chairman.

 Russell: Then Trevor proposed that he be allowed to sell $70 million of his shares. AUSA: Did you speak with Mr Milton about that it means to be the leader of a public company? Russell: I told him his public statements had to be vetted like SEC filings

 AUSA Estes: Let's review these text message -- Milton's lawyer Mukasey: Objection! Judge Ramos: Overruled. Mukasey: If I might, one of the recipients is not with Nikola. [Speaking objection] Judge Ramos: Overruled. AUSA Estes: Let's go over them...

Russell: The language in his tweets would not have passed muster with Legal. Mukasey: Objection! Judge Ramos: Overruled. Russell: It was suggested to Trevor that he turn off his social media, or let Britton pre-screen his posts

 AUSA Estes: Mr. Russell, were you on social media? Russell: No. AUSA Estes: So how did you see his tweets? Russell: They showed me screen shots.

AUSA Estes: We offer GX22. Mukasey: Hearsay, may we approach Judge Ramos: You may. [Whispered sidebar ensues] AUSA Estes: When Mr. Girsky says, Trevor pretty active on social media about the Badger, what did you reply?

Russell: I wrote, I wish he wouldn't... We'd try to persuade him. AUSA Estes: Did you have ideas with passwords? Russell: We changed to company's passwords

AUSA Estes: Then what happened? Russell: He talked to someone and got it reversed, he kept tweeting... Later he said he wanted to announce hydrogen stations on his media blitz.

AUSA: Which media blitz? Russell: As soon as we went public.

Russell: Our market cap had gone from $3 billion to $27 billion in five days. Mr. Peterson (sp) said, This is setting up for a massive dive.  AUSA: And here, Michael Erickson wrote to you about Mr. Milton's social media, "It's news to me." Russell: Yes.

Now on screen in courtroom (and before each juror), text exchange between Russell and Kim Brady, who said Rivian's CEO's post was a dig at Trevor.

Russell: Yes, it was. I cited Rivian as an example of raising capital without an aggressive social media campaign.

Russell: Mr. Milton said he thought this was a democratization of the capital markets. I told him we should vet this statements. AUSA: Were you able to? Russell: No.

AUSA: On stock price, how did you differ? Russell: Trevor was focused on it day to day. Now US plays Milton says, "People love Apple because everyone touches their product... I needed to touch the consumer, pick-up truck's for that, Robinhood investors, family office." AUSA: What about Robinhood? Russell: It was symbolic of the investors he targeted

 AUSA: What was Mr. Milton purchasing? Russell: Ranch land in Utah and Wyoming. And jets. I told him he should wait. We had no revenue.

 Judge Ramos calls a break. Then, with jury out of room, asks, Are you planning to have a witness in a wheelchair later this week? AUSA Estes: Yes. Judge Ramos: Just tell us when. Don't be late. Thread will continue

 They'd back. AUSA Estes: Do you wish Nikola had taken down the link to the Tesla Charts podcast? Russell: I wish we had. Elizabeth Fretheim flagged it.

AUSA: How about Transport Topics of March 12, 2020... Line 12... Was Nikola getting hydrogen at $4?

Russell: No. Inner City Press @innercitypress · 2h AUSA Estes: Did you ask Mr. Milton to do on this podcast? Russell: No. AUSA: Did you give him talking points? Russell: No.

 AUSA: How would you describe your relationship with Mr. Milton at this time? Russell: Strained.  I thought the Badger was too big a risk. He continued to push it.  AUSA: Did you and Mr. Brady and Mr. Worthen speak to him? Russell: We called it an intervention

 AUSA: How did he respond? Russell: He expressed emotional hurt. He told me to decide if he was on his side or not. I started considering resigning. But it would have created a crisis for the company. Soon the short seller report came out.

Russell: The chair told me the board would start negotiating with Mr. Milton for his exit.

AUSA: Nothing further.

Judge Ramos: Cross examination.

Milton's lawyer Mukasey: So she played you some podcasts, you recall?

Russell: Yes. Mukasey: Nikola has models, right?

 Mukasey: Trevor was pretend talented at promotion, correct? Russell: Yes. Mukasey: Are you familiar with the so called in-motion video, rolling a truck down a hill?

Russell: Yes. Mukasey: The video was about the Nikola 1, right? Russell: Right.

Mukasey: Trevor is 20 years younger than you, so has less experience, right? Russell: Yes. Mukasey: You were a mentor, right? Russell: I tried to help him.

Mukasey: Would you say that the company was sort of like Trevor's child? AUSA Estes: Objection! Calls for speculation.

Judge Ramos: Sustained as to the form of the question. Mukasey: Would you say he had an emotion connection to the company? Russell: Yes.

 Mukasey: You considered the beer run [Busch trucking in Nikola 2] a great success right? Russell: It came off just like we planned.

Mukasey: Let's talk about the board - one member came from Hanwha, right? Russell: She's no longer on the board. But she was.

Mukasey: OK, so you announced about the SPAC merger in March 2020 and an S-4 was filed, right? Russell: I haven't looked at the S-4 recently. Mukasey: I'm offering it into the record.

Mukasey: Trevor's sale of $70 million in stock was disclosed, right? Russell: It was. Mukasey: This 10-Q says Nikola had Ernst & Young as auditor, right? Russell: Yes. Judge Ramos: Let's take a break. They've back.

Mukasey: You are familiary with Elon Musk's presence on Twitter, correct? AUSA Estes: Objection! Judge Ramos: Overruled. Russell: I am aware.

Mukasey: The meeting with Softbank, there was a lot of puffing, right? Russell: What do you mean by puffing?

Mukasey: Didn't you tell the US Attorney's Office that he didn't make any factual misrepresentations? AUSA: Objection! Judge Ramos: Overruled.

Russell: He went off-script in the Softbank meeting. But I don't remember any factual misrepresentations. Mukasey: In some of this, you use the present tense - you weren't trying to mislead anyone, were you? Russell: No, I was not.

 Mukasey: Your shares, how much are they worth? Russell: I'm not sure. Yesterday, $19 to 20 million. I mean, 190 to 200 million dollars. [Some jurors perk up]

Judge Ramos: You mentioned Black-Scholes, what is it? Russell: A way of calculating the value of shares.

Mukasey: In this podcast, Trevor says You want the Robinhood investors, but you want to turn them into Warren Buffetts, long time buy and hold, right?

Russell: Yes. Mukasey: You realize the podcasts are very long, right? Russell: Extremely long.

 Mukasey: You agree that if someone snipped a little portion of one of your interviews, it could distort --

AUSA Estes: Objection! Judge Ramos: Sustained. Mukasey: While you say you had concerns strategically about the Badger, it was bad ass, right? Better than [Musk's / Tesla's] CyberTruck?

Russell: I liked the way it looked. Mukasey: In the industry, it's normal to use donor parts, right? Russell: Yes.

Mukasey: Nikola got a grand jury subpoena and agreed to cooperate with the government, right?

Russell: We provided a lot of documents. Mukasey: We asked to meet with you, and you declined, right? Russell: I did. On advice of counsel.

 Mukasey shows video of Russell pitching Nikola semi, saying "we made the hydrogen in the first place." You didn't mean to mislead, did you?

Russell: I did not. Mukasey: When did the intervention take place? Russell: I didn't keep notes.

Mukasey: No further questions. 

And after a short re-direct, next witness is Stephanie Amzallag.

AUSA: Where do you work?

Amzallag: Nikola, in social media, since March 2019

Trial will continue.

The case is US v. Milton, 21-cr-478 (Ramos)


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